Financial Data and Key Metrics Changes - The company reported fourth-quarter revenue of $1.84 billion, an increase of 6% year-over-year, driven mainly by new program wins and on-contract growth [18] - Full-year fiscal year 2025 revenue reached $7.48 billion, representing 3.1% organic growth, which is at the high end of the guidance provided at the start of the year [19] - Fourth-quarter adjusted EBITDA was $177 million, resulting in a margin of 9.6%, while full-year adjusted EBITDA was $710 million with a margin of 9.5% [19][20] - Adjusted diluted earnings per share for the fourth quarter was $2.57 and $9.13 for the full year, benefiting from strong operating performance and a lower effective tax rate [19] Business Line Data and Key Metrics Changes - Revenue from the commercial operating sector increased from less than $1 million in fiscal year 2022 to approximately $45 million in fiscal year 2025, with a goal of reaching approximately $100 million by fiscal year 2028 [12] - The company delivered net bookings of $1.3 billion in the fourth quarter and $6.6 billion for fiscal year 2025, resulting in a book-to-bill ratio of 0.9% [15] Market Data and Key Metrics Changes - The company submitted bids totaling $28 billion in fiscal year 2025, exceeding the initial plan of $22 billion, with a backlog of submitted bids increasing to just over $20 billion at year-end [16] - The company expects to drive its book-to-bill ratio to the target of 1.2% by the first half of FY 2026, contingent on ongoing uncertainties facing customers [17] Company Strategy and Development Direction - The company is focusing on transitioning from cost-plus contracts to fixed-price contracts, which is expected to improve margins while maintaining revenue levels [46][50] - The strategy emphasizes mission-critical programs and the infusion of cutting-edge technology, aligning with government efficiency initiatives [9][56] - The company is assessing its cost-plus portfolio to determine how much work could transition to fixed-type contracting over time [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the financial impact from recent executive orders and program cancellations has been nominal, but they remain prepared for potential changes in the operating environment [8] - The company anticipates a headwind of approximately $200 million related to low-margin Air Force CloudOne compute and store revenue, which they chose to no-bid [24] - Management expressed confidence in achieving free cash flow targets of $11 per share in fiscal year 2026 and $12 in fiscal year 2027 [20][26] Other Important Information - The company plans to repurchase between $350 million to $400 million in FY 2026 and 2027 while maintaining capacity for capability-focused M&A or additional share repurchases [26] - Several members of the executive leadership team have indicated an intent to make discretionary purchases of company shares to align interests with shareholders [28] Q&A Session Summary Question: Impact of the $1.8 billion recompete on future book-to-bill - Management indicated that the win would bring them close to a trailing twelve-month book-to-bill ratio of 1.0% [32] Question: Details on the incremental $6 billion in submitted bids - The increase is attributed to a combination of standardized business development functions and a balanced pipeline of new business and recompete opportunities [35] Question: Nature of budget dollars in the bid pipeline - Management believes the current pipeline is competitive and can be funded, with a focus on mission-critical areas [41] Question: Transition from cost-plus to firm fixed price contracts - Management sees potential for higher margins with fixed-price contracts but does not expect a significant revenue decline [48] Question: Risks and opportunities related to DOD budget cuts - Management emphasized the importance of focusing on mission-critical programs to mitigate risks associated with budget reallocations [56] Question: Impact of federal workforce layoffs on business - Management has not seen significant impacts but is prepared to support customers as personnel changes occur [66] Question: Backlog and organic growth expectations - A high percentage of the expected organic growth is already in backlog, with a focus on contract growth rather than relying heavily on new business [75] Question: Confidence in guidance despite uncertainty - Management expressed confidence based on past performance and ongoing efforts to drive organic growth [90] Question: Strategy regarding civil versus defense work - The company has not shifted its strategy and continues to focus on mission-critical areas in both civil and defense sectors [104]

Revenue Sources - In fiscal 2025, 98% of total revenues were attributable to prime contracts with the U.S. government or subcontracts with other contractors engaged in work for the U.S. government[32]. - Approximately 52% of total revenues in fiscal 2025 were from the Department of Defense, while 46% were from Intelligence and other federal government agencies[33]. - In fiscal 2023, 49% of total revenues were from both the Department of Defense and Intelligence and other federal government agencies[34]. - The company generated 98% of total revenues from U.S. government contracts over the last three fiscal years, highlighting dependency on government spending[74]. - In fiscal 2025, revenue breakdown included approximately 16% from fixed-price contracts, 22% from time and materials contracts, and 62% from cost-reimbursable contracts[82]. - Revenues for fiscal 2025 were $7,479 million, a slight increase of $35 million from fiscal 2024, primarily due to ramp-up in volume in existing and new contracts, partially offset by the sale of the Supply Chain Business[193]. - Revenues decreased by $91 million from fiscal 2024 to fiscal 2025, primarily due to the sale of the Supply Chain Business ($188 million) and contract completions, but adjusted revenues grew by 1.7% when excluding the divestiture[207]. - The revenue mix for fiscal 2025 included 79% from cost reimbursement contracts, 10% from time and materials, and 11% from firm-fixed price contracts[233]. Employee and Talent Management - As of January 31, 2025, the company employed approximately 24,000 individuals, including over 6,000 active military or veterans[57]. - The company achieved its highest overall score in five years in the fiscal 2025 culture survey, exceeding national benchmarks by 6%[59]. - In fiscal 2025, the company invested in talent development with over 140,000 training hours completed, averaging nearly 6 hours per employee[61]. - More than 21% of approximately 5,000 new employees were hired through employee referrals, indicating strong internal talent attraction[63]. - The voluntary attrition rate was approximately 13%, demonstrating industry-leading employee retention[63]. - More than 450 employees participated in leadership development programs, totaling nearly 8,500 hours of training[62]. - The company is committed to employee well-being, offering wellness programs and an Employee Assistance Program to support mental and financial health[65]. Financial Performance - Cost of revenues for fiscal 2025 was $6,587 million, an increase of $15 million from fiscal 2024, driven by ramp-up in volume on existing and new contracts[195]. - Selling, general and administrative expenses decreased to $339 million in fiscal 2025, down $34 million from fiscal 2024, mainly due to lower incentive-based compensation[197]. - Operating income for fiscal 2025 was $563 million, a decrease of 24% compared to fiscal 2024, with operating income as a percentage of revenues at 7.5%[193]. - Net income attributable to common stockholders for fiscal 2025 was $362 million, a decrease of 24% from fiscal 2024[193]. - Adjusted EBITDA for fiscal 2025 was $710 million, with an adjusted EBITDA margin of 9.5%, an increase from 9.0% in fiscal 2024[224]. - The effective income tax rate for fiscal 2025 is lower than fiscal 2024, primarily due to the gain from the divestiture of the Supply Chain Business[202]. - Operating loss for the Corporate segment was $45 million in fiscal 2025, a significant decrease from an operating income of $147 million in fiscal 2024[216]. - The adjusted operating income for the Corporate segment improved to a loss of $20 million in fiscal 2025, compared to a loss of $51 million in fiscal 2024[214]. Risks and Challenges - The company faces risks from potential reductions in U.S. government defense spending, which could adversely affect future revenues and cash flows[75]. - The company is subject to rigorous government audits, which could lead to adjustments in contract costs and mandatory customer refunds, potentially impacting profitability and cash flows[93]. - The company may face civil or criminal penalties if investigations reveal improper activities, which could include contract terminations and reputational harm[96]. - The U.S. government has the right to terminate or modify contracts at any time, which could adversely affect revenue growth and profitability[97]. - The company faces risks related to health epidemics, which could disrupt operations and impact financial performance[110]. - The company may engage in acquisitions or divestitures that could disrupt operations and pose financial risks if not managed properly[105]. - The company faces potential liabilities and negative publicity if its detection systems fail, particularly regarding tsunami buoys deployed by the U.S. National Oceanic and Atmospheric Administration[121]. - Climate change poses risks to the company's operations, as extreme weather events could disrupt contractual obligations and affect business performance[117]. - Cybersecurity threats are a significant concern, with potential impacts on business operations and customer trust if sensitive information is compromised[132]. - The company has experienced cybersecurity incidents, but none have materially impacted operations to date; however, future incidents could harm reputation and financial performance[136]. Strategic Initiatives - The company completed a business reorganization effective February 3, 2024, transitioning from two operating sectors to five customer-facing business groups[172]. - The sale of the Supply Chain Business in May 2023 allowed the company to focus on long-term strategic growth areas[187]. - The company anticipates that spending packages related to digital modernization and climate resiliency may provide additional opportunities[183]. - The company expects continued ramp-up in volume on existing and new contracts to drive future revenue growth despite challenges from contract completions[209]. - The company is actively monitoring changes in environmental laws and implementing sustainability initiatives to mitigate risks associated with climate change[91]. Backlog and Future Outlook - As of January 31, 2025, the total backlog was estimated at $21.857 billion, a decrease from $22.763 billion on February 2, 2024[232]. - Net bookings for fiscal 2025 were approximately $6.6 billion, compared to $6.7 billion in fiscal 2024[232]. - Funded backlog for government contracts was $3.444 billion as of January 31, 2025, down from $3.539 billion in the previous year[232]. - The company anticipates that ongoing reforms in the U.S. government acquisition process could lead to delays in contract awards and increased competition[89].

FINANCIAL RESULTS FY25 4Q SUPPLEMENTAL FINANCIAL PRESENTATION March 17, 2025 Forward Looking Statements In addition, these slides should be read in conjunction with our earnings press release dated March 17, 2025 along with listening to or reading a transcript of the management comments delivered in an earnings conference call held on March 17, 2025. All information in these slides are as of March 17, 2025. SAIC expressly disclaims any duty to update any forward-looking statement provided in this release to ...

Defense IT specialist Science Applications International (SAIC 11.83%) delivered better-than-expected earnings, easing concerns about pullbacks as part of the government's efficiency push. Investors applauded the results, sending SAIC shares up 13% as of 10 a.m. ET.Strong margin performanceSAIC is one of several defense contractors focused on providing technical services to various military and civil government agencies. The company earned $2.57 per share in its fiscal fourth quarter ending Jan. 31 on reven ...

SAIC (SAIC) came out with quarterly earnings of $2.57 per share, beating the Zacks Consensus Estimate of $2 per share. This compares to earnings of $1.43 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 28.50%. A quarter ago, it was expected that this information technology company would post earnings of $2.17 per share when it actually produced earnings of $2.61, delivering a surprise of 20.28%.Over the last four quarters, the ...

Core Insights - Science Applications International Corporation (SAIC) reported strong financial results for the fourth quarter and full fiscal year ended January 31, 2025, with revenue, adjusted EBITDA, adjusted earnings per share, and free cash flow exceeding guidance [2][3][8] - The company secured a significant $1.8 billion contract award for the System Software Lifecycle Engineering program, marking its largest recompete win in recent years, alongside a backlog of submitted bids valued at approximately $20 billion [2][3] Financial Performance - **Fourth Quarter Results**: Revenues increased by $101 million to $1.84 billion, a 6% rise compared to the prior year quarter, driven by increased volume on new and existing contracts [5][8] - **Operating Income**: Operating income rose to $138 million, a 75% increase from the previous year, with an operating margin of 7.5% [3][6] - **Net Income**: Net income for the quarter was $98 million, a 151% increase year-over-year, with diluted earnings per share at $2.00 [3][8] - **Adjusted EBITDA**: Adjusted EBITDA was $177 million, representing a 39% increase, with an adjusted EBITDA margin of 9.6% [3][7] Fiscal Year Overview - **Annual Revenue**: For the fiscal year 2025, revenues reached $7.48 billion, a slight increase of $35 million compared to the previous year, with organic growth of approximately 3.1% after adjusting for divestitures [10][8] - **Operating Income**: Operating income decreased by 24% to $563 million, primarily due to a prior year gain from the sale of the Supply Chain Business [11][12] - **Net Income**: Net income for the fiscal year was $362 million, down 24% from the previous year, with diluted earnings per share at $7.17 [3][13] Cash Flow and Capital Deployment - **Cash Flow**: Operating cash flow for the fourth quarter was $115 million, an increase of 83% year-over-year, while free cash flow was $236 million, a 143% increase [14][8] - **Capital Deployment**: In the fourth quarter, SAIC deployed $163 million in capital, including $130 million for share repurchases and $18 million in dividends [16][8] Backlog and Contract Awards - **Backlog**: As of January 31, 2025, SAIC's estimated backlog was approximately $21.9 billion, with $3.4 billion funded [18][46] - **Contract Awards**: Notable awards included a $187 million task order for the Defense Readiness Reporting System and approximately $480 million in contract awards from space and intelligence organizations [18][20] Guidance for Fiscal Year 2026 - **Revenue Guidance**: The company provided guidance for fiscal year 2026, projecting revenues between $7.60 billion and $7.75 billion, with adjusted EBITDA expected between $715 million and $735 million [21][22]

Financial Performance - Q4 FY25 revenues reached $1.84 billion, representing a 6% increase year-over-year, while FY25 revenues totaled $7.48 billion, showing no significant change from FY24[4] - Q4 FY25 net income was $98 million, a 151% increase compared to the prior year, with adjusted EBITDA of $177 million, or 9.6% of revenue[5] - Diluted earnings per share for Q4 FY25 were $2.00, up 170% from $0.74 in the prior year, while adjusted diluted earnings per share were $2.57, an 80% increase from $1.43[5] - Adjusted EBITDA for FY25 was $710 million, or 9.5% of revenue, reflecting a 6% increase from the previous year[5] - Revenues for the three months ended January 31, 2025, were $1,838 million, an increase of 5.8% compared to $1,737 million for the same period in 2024[26] - Net income for the three months ended January 31, 2025, was $98 million, compared to $39 million for the same period in 2024, representing a 151.3% increase[26] - The company reported a total revenue of $7,479 million for the fiscal year ended January 31, 2025, compared to $7,444 million in the previous year, reflecting a slight increase of 0.5%[26] - Revenues in the fiscal year increased by $126 million or 8% compared to the prior year, primarily due to ramp up in volume on existing and new contracts[37] Cash Flow and Operating Activities - The company generated $115 million in cash flows from operating activities in Q4 FY25, an 83% increase from the prior year, and free cash flow was $236 million, a 143% increase[5] - Cash flows from operating activities for the year ended January 31, 2025, were $494 million, compared to $396 million in the previous year, an increase of 24.7%[30] - Free cash flow for the three months ended January 31, 2025, was $236 million, up from $97 million in the same period last year[60] - The company expects net cash provided by operating activities for FY26 to be between $545 million and $565 million[60] - The company anticipates free cash flow for FY26 to be between $510 million and $530 million[60] Backlog and Bookings - Net bookings for Q4 FY25 were approximately $1.3 billion, resulting in a book-to-bill ratio of 0.7, while total net bookings for FY25 were approximately $6.6 billion, with a book-to-bill ratio of 0.9[16] - The estimated backlog at the end of FY25 was approximately $21.9 billion, with $3.4 billion funded[16] - The estimated total backlog as of February 2, 2024, was $22,763 million, with funded backlog at $3,539 million and negotiated unfunded backlog at $19,224 million[41] Segment Performance - The Defense and Intelligence segment generated revenues of $1,360 million for the three months ended January 31, 2025, compared to $1,352 million in the same period last year, a growth of 0.6%[32] - Civilian segment revenues increased to $478 million for the three months ended January 31, 2025, from $385 million in the same period last year, a growth of 24.2%[32] Guidance and Future Projections - Fiscal year 2026 guidance includes projected revenues of $7.60 billion to $7.75 billion and adjusted EBITDA of $715 million to $735 million[19] Operating Income and Margins - Operating income as a percentage of revenues for Q4 FY25 increased to 7.5%, up from 4.5% in the prior year, due to improved profitability across contracts[7] - The total operating margin for the three months ended January 31, 2025, was 7.5%, compared to 4.5% for the same period in 2024[32] - Operating income for the fiscal year ended January 31, 2025, was $563 million, down from $741 million in the prior year, a decrease of 24.1%[26] - Adjusted operating income for the fiscal year was $705 million, with a margin of 9.4%[50] Other Financial Metrics - The company’s total assets as of January 31, 2025, were $5,246 million, a decrease from $5,314 million as of February 2, 2024[28] - Total stockholders' equity decreased to $1,577 million as of January 31, 2025, from $1,785 million as of February 2, 2024, a decline of 11.7%[28] - Operating loss in the fiscal year increased by $192 million compared to the prior year, primarily due to a gain on the sale of the Supply Chain Business in the prior year[38] - Adjusted operating loss in the fiscal year decreased by $31 million compared to the prior year, mainly due to lower incentive-based compensation expenses[39] - EBITDA for the fourth quarter was $175 million, representing 9.5% of revenues, compared to $118 million or 6.8% for the same period last year[44] - The operating loss and adjusted operating loss in the fourth quarter decreased by $19 million and $12 million, respectively, compared to the same period in the prior year[38] Restructuring and Costs - The restructuring and impairment costs for the year ended January 31, 2025, were $8 million, impacting the adjusted diluted EPS[57] - The acquisition and integration costs for the year ended January 31, 2025, were $2 million, which were excluded from the adjusted results[57] Summary of Net Income - The company achieved a net income of $362 million for the year ended January 31, 2025, compared to $477 million for the year ended February 2, 2024[57]

Financial Performance - Science Applications International Corporation (SAIC) is set to release its fourth-quarter financial results on March 17, with analysts expecting earnings of $2.09 per share, an increase from $1.43 per share in the same period last year [1] - The projected quarterly revenue for SAIC is $1.81 billion, compared to $1.74 billion a year earlier [1] Dividend Information - SAIC currently offers an annual dividend yield of 1.42%, translating to a quarterly dividend of 37 cents per share, or $1.48 annually [2] - To generate $500 monthly or $6,000 annually from dividends, an investment of approximately $422,670 or around 4,054 shares is required. For a more modest income of $100 monthly or $1,200 annually, an investment of $84,555 or around 811 shares is needed [2] Dividend Yield Dynamics - The dividend yield can fluctuate based on changes in the stock price and dividend payments. It is calculated by dividing the annual dividend payment by the stock's current price [3][4] - For instance, if a stock's price increases while the dividend remains the same, the yield decreases, and vice versa [4][5] Stock Performance - Recently, shares of SAIC fell by 0.4%, closing at $104.26 [5]

Core Insights - SAIC and Defense Unicorns have formed a strategic partnership to enhance the delivery of secure and scalable software capabilities for the Department of Defense (DoD) [1][5] - The integration of Defense Unicorns' Unicorn Delivery Service (UDS) into SAIC's software delivery ecosystem aims to streamline application deployment across various environments, improving operational readiness for military personnel [1][3] Software Delivery Challenges - The DoD faces challenges with traditional software delivery methods, which often lead to fragmented and slow processes, impacting the deployment of critical capabilities [2] - There is a need for industry partners to provide solutions that address issues such as bespoke infrastructure and inconsistent security standards [2] Benefits of UDS Integration - Adopting UDS as the standard software delivery platform will allow for more efficient deployment of mission-ready applications, reducing delivery timelines from months to weeks or days [3] - UDS automates deployment, accelerates compliance, and removes integration barriers, ensuring timely delivery of software updates and new capabilities [4] Strategic Commitment - SAIC is dedicated to providing an innovative ecosystem of next-generation offerings that meet unique mission needs and accelerate outcomes for the DoD [4] - The partnership is expected to fundamentally change how the DoD fields mission-critical software, enhancing the speed and security of software delivery [5][6] Company Profiles - SAIC has over 50 years of experience in technology integration for government customers, with annual revenues of approximately $7.4 billion [8] - Defense Unicorns, founded in 2021, focuses on transforming how the DoD acquires and sustains software capabilities, trusted by critical military branches [9][10]

Group 1: Market Trends and Defense Spending - European Commission President Ursula von der Leyen announced an 800 billion euro ($841 billion) "REARM Europe" program to enhance military capabilities and support Ukraine, which may lead to increased purchases from U.S. defense contractors [3] - Citigroup suggested that recent declines in defense stock prices combined with potential European spending indicate it is time to buy defense stocks, highlighting a projected increase of $300 billion in the U.S. defense budget over the next 10 years [4] - Wells Fargo noted that defense stocks are becoming "interesting" and raised its price target on Lockheed Martin, reflecting a growing positive sentiment on Wall Street [5] Group 2: Company Valuations - Lockheed Martin's current price-to-earnings (P/E) ratio is 21.2, which is lower than the S&P 500 average of 28.8, but its price-to-sales (P/S) ratio of 1.6 and enterprise value-to-sales ratio of 1.8 indicate it is 43% more expensive than its 20-year average [7] - Science Applications International Corporation (SAIC) has a more attractive valuation with a P/E ratio of 17.9 and a P/S ratio of 0.8, along with significantly higher free cash flow compared to net income [8] - GE Aerospace's valuation is complex due to its hybrid business model, with a P/S ratio of 5.5 and a P/E ratio of nearly 32, which appear expensive given its cash flow generation [9][10]